Gold prices increased in the global market and it happened on Thursday. This was triggered by comments made by U.S. Federal Reserve Chairman Jerome Powell. His statement reinforced expectations around the possibility of lower interest rates over the next few months. 

Elsewhere, the possibility of stimulus given after Joe Biden officially took office has also further raised the appeal of gold as an inflation hedge. The commodity is known to often be in a stable position where it is better than others such as oil.

Spot of gold reportedly rose as much as 0.8% after comments made by the Fed leader some time ago. Then, the metal rose 0.3% to $1,848.22 an ounce. Elsewhere, the gold futures of the US were still 0.2 percent lower at $1,851.40 an ounce.

Statement on Interest Rates from Powell

Powell told that the increasing rate would be set in the near future. He also rejected the central bank’s suggestion that may have to start reducing bond purchases in the near future. Powell gave firmness about the dovish attitude of the bank.

A senior analyst from OANDA named Edward Moya told some will see that the organization could be accommodative. It becomes the reason why prices of gold may rise. Furthermore, the existing rate of interest conditions also affects it.

That low rates of interest make the chance of cost. It is especially for holding gold bullion decline again. The situation also does not yield and weighs on the dollar. After that comment, several moves occurred in global markets. It is especially for the main currency and commodity.

It was reported that the index of the dollar weakened. Does that thing make the price of gold is not that expensive especially for those who hold other currencies? Meanwhile, the total number of people in the USA who applying for unemployment benefits also increased last week. 

The Unstable Situation of The Labor Market

The increase in that application sector in America which is happened again reminds everyone that the situation of the labor market is still not that stable. Such conditions will obviously require more stimuli in the future. This was conveyed by Moya.

He also thought that the effect of this COVID-19 pandemic remains one of the factors supporting gold. For your information, Joe Biden as the elected president is scheduled to release details on the clear amount of stimuli on Thursday.

Based on the rumors, such fun could exceed the value of $1.5 trillion. That is in a situation where gold is thought of as a commodity against inflation and a decline in the value of the currency. It is clear that these aspects will be gotten from the widespread economic fund.

During that time, the recent surge in yields of bonds then may change the status. The trigger is the growing cost of opportunities to hold gold bars that do not yield results. Bond yields are also rumored to be soaring higher.

US Dollar Weakens Slightly

Meanwhile, the US Dollar weakened slightly on Thursday. This halted the recent rebound from a three-year low. That comes on the back of higher U.S. yields as market participants expect further substantial stimulus measures.

CNN said last night that President-elect Joe Biden would outline and explain the plan on delivering fiscal stimulus. There are not a few of them. Reportedly, the funding provided is about $2 trillion. Because of this prospect, the dollar has increased.

The US dollar has risen in at least four of the last five trading sessions. Much of the increase is financed by loans and has weighed on U.S. government bonds. It also sent government bond yields above 1% for the first time since March.

Another factor that has caused the USD to decline lately is the concern that the Federal Reserve may reduce its monetary support sooner than originally expected. This possibility is considered to be possible because the economy is considered to be recovering.